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Independent Payment Advisory Board

One of the most
controversial provisions of the Patient Protection and Affordable Care
Act was the establishment of an Independent Payment Advisory Board
(IPAB).
The AMA is opposed to the current scope and authority of IPAB and the
lack of flexibility in its mandate. Modification of the IPAB authority
and framework is one of the highest legislative priorities for the AMA
in the next session of Congress.

What is the IPAB?

The Patient
Protection and Affordable Care Act established a 15-member IPAB to
extend Medicare solvency and reduce spending growth through the use of
a
spending target system and fast-track legislative approval process.

By April 30 of
each
year—beginning in 2013—the Centers for Medicare & Medicaid
Services
(CMS) Actuary's Office will project whether Medicare's per-capita
spending growth rate in the following two years will exceed a targeted
rate. Initially, the targeted rate of spending growth will be based on
the projected five-year average percentage increase in the Consumer
Price Index for all urban consumers and the Consumer Price Index for
all
urban consumers for medical care.

Beginning in 2019,
the target will be set at the nominal gross domestic product per
capita
+ 1.0 percent. If future Medicare spending is expected to exceed the
targets, the IPAB will propose recommendations to Congress and the
president to reduce the growth rate. The IPAB's first set of
recommendations would be proposed on Jan. 15, 2014.

Spending rate
reductions will be established at:

0.5 percent in 2015

1.0 percent in 2016

1.25 percent in 2017

1.5 percent in 2018 and beyond

If Congress fails
to
pass legislation by Aug. 15 each year to achieve the required savings
through other policy changes, the IPAB's recommendations will
automatically take effect. The IPAB is prohibited from submitting
proposals that would ration care, increase revenues, change benefits,
modify eligibility, increase Medicare beneficiary cost-sharing
(including Parts A and B premiums), or change the beneficiary premium
percentage or low-income subsidies under Part D. Hospitals and hospice
will not be subject to cost reductions proposed by the IPAB from 2015
through 2019. Clinical labs would be exempt for one year.

Beginning July 1,
2014, the IPAB must also submit an annual report providing information
on system-wide health care costs, patient access to care, utilization
and quality of care that allows comparison by region, types of
services,
types of providers, and payers—both private insurers and Medicare. By
Jan. 1, 2015, and at least every other year thereafter, the IPAB will
submit recommendations to slow the growth in national health care
expenditures while preserving or enhancing quality of care. These
recommendations could be those that: (1) the secretary of Health and
Human Services (HHS) and other federal agencies could implement
administratively; (2) may require federal legislation to be
implemented;
(3) may require state or local government legislation to be
implemented;
or (4) private entities can voluntarily implement.

Fast-track legislative process

By Jan. 15 of each year, beginning in 2014, the IPAB
must submit a proposal to Congress and the president for achieving
Medicare savings targets in the following year.

If the IPAB fails to submit a proposal to Congress
and the president by Jan. 15, the HHS secretary must submit a
proposal for meeting the savings targets to the president and the
Medicare Payment Advisory Commission (MedPAC) by Jan. 25 of that
same year. The president must submit the secretary's proposal to
Congress within two days.

The House and Senate Majority Leader or their
designee must introduce the IPAB proposal the same day it is
received (or on the first day the chamber is in session). If the
proposal is not introduced within five days, any senator or
representative can introduce it.

The proposal must be referred to the Senate Finance
Committee and the House Ways and Means and House Energy and Commerce
Committees.

By April 1, the committees of jurisdiction are to
complete their consideration of the proposal. Any committee that
fails to meet that deadline will be discharged from further
consideration.

Congress cannot consider any bill or amendment that
does not meet the IPAB targets or that would repeal or change the
fast-track congressional consideration process without a
three-fifths vote (60) in the Senate. Non-germane amendments are not
permitted.

The HHS secretary must implement the IPAB proposal on
Aug. 15 of the year in which the proposal is submitted.
Recommendations regarding the physician fee schedule would take
effect on Jan. 1 the following year. If Congress does not pass the
proposal before Aug. 15, or if the president vetoes the proposal as
passed by Congress, the original IPAB recommendations would take
effect. (All policy changes affecting physicians that are not part
of the physician fee schedule will be addressed in the regulatory
process and will take effect as soon as practicable.)

IPAB board members

The IPAB members are to include:

Fifteen members appointed by the president, by and
with the advice and consent of the Senate; in selecting individuals
for nominations for appointments to the board, the president shall
consult with: (i) the majority leader of the Senate concerning the
appointment of three members; (ii) the speaker of the House of
Representatives concerning the appointment of three members; (iii)
the minority leader of the Senate concerning the appointment of
three members; and (iv) the minority leader of the House of
Representatives concerning the appointment of three members

The HHS secretary, the administrator of CMS, and the
administrator of the Health Resources and Services Administration
(all of whom will serve ex officio as nonvoting members of the
Board)

Qualifications/requirements for IPAB members:

Appointed members of the IPAB will include
individuals with national recognition for their expertise in health
finance and economics, actuarial science, health facility
management, health plans and integrated delivery systems, health
facilities reimbursement, allopathic and osteopathic physicians,
other providers of health services, and other related fields who
provide a mix of professionals, broad geographic representation, and
balance between urban and rural areas.

IPAB members must include (but not be limited to)
physicians and other health professionals, experts in the area of
pharmaco-economics or prescription drug benefit programs, employers,
third-party payers, individuals skilled in the conduct and
interpretation of biomedical, health services, and health economics
research, and expertise in outcomes and effectiveness research and
technology assessment. Members must also include individuals
representing consumers and the elderly.

Individuals who are directly involved in providing or
managing the delivery of Medicare items and services may not
constitute a majority of IPAB's membership.

The president must establish a system for public
disclosure by IPAB members of any financial and other potential
conflicts of interest.

No IPAB member may be engaged in any other business, vocation or employment.